Well, to tell you the truth I did not expect moratorium. I expected tougher regulations, so no not "business as normal after 2 weeks", but also not full indeterminate suspension of deepwater drilling. Probably I should have expected it, but I did not. Moratorium changes expectations in a major way, since now we know that GOM work is gone for 6 months minimum and possibly longer.
I also expected the leak to be stopped faster, which was a bit naive. If the leak was stopped faster, there would not have been a moratorium.
Finally, even though I may seem like a driller-bull, I have always been a bit uncomfortable with the fact that they are in commodity (even the deep-water drilling is becoming overcrowded/commoditized) service industry that is probably not really growing while facing buildout glut. I'd rather be in E&Ps which have physical assets in the ground that are getting more rare. Drillers did seem to be cheap and I think they were, but now we are getting into a pretty bad political+oversupply storm. The real question is not what I missed by not selling 30% higher (actually I don't think I lost that much money, since my positions were minor and I did some trading that might have helped), but whether the current prices are attractive enough to discount the issues we know of.
but selling and asking questions later is often not a bad strategy if something unexpected happens.
Not really. I never sell if it's clear what the unexpected entails and if I believe it is temporary or not important to long term business. Kneejerk selling is usually bad strategy even though you, Dale (through stops, I think) and Mike Burry (through stops) advocate it. Yes, I will suffer worse (temporary?) losses than kneejerk sellers when the issue is worse than originally thought. I win when the issue is not as bad as assumed and kneejerk sellers never have a chance to rebuy at the original drop price. |
